International Policy and Estate Planning: Foreign Distributees in the Crosshairs

Article 16 of the New York’s Surrogate’s Court Procedure Act deals with foreign estates.  The legislative purpose for the enactment of the procedure with respect to foreign estates includes the following:  “If the law of such jurisdiction does not provide for the appointment of a fiduciary but vests the property of a decedent in a person or persons subject to the obligation to pay the decedent’s debts and expenses and the legacies bequeathed in his will or the distributive shares provided by law, such a person shall be recognized as the person acting therein to administer the decedent’s estate in accordance with the law thereof, but only if such person has complied with all the requirements of such jurisdiction to entitle him to receive the property of the decedent and is acting or will act there to administer the estate“ (underlining my own).  What may seem to be at first glance a benign statement can yield unanticipated complications, particularly if foreign policy is diametrically opposed to the wishes of the testator.

In re Estate of Gyfteas, 59 Misc. 2d 977, 300 N.Y.S.2d 913, 1968 N.Y. Misc. LEXIS 993 (Surrogate’s Court of New York, New York County December 12, 1968), the testator was a Greek citizen and domiciliary who owned property in New York.  His Will named three executors and devised some monetary bequests, with the residuary going to charity.  Since the decedent did not have a valid New York Will, an administration proceeding was begun by one of the executors for the property in New York.  Then the legatees filed a separate petition for letters of administration for the New York property claiming that the executors had no right to distribute the New York-based assets.

N.Y. Surr. Ct. Proc. Act § 1604(1) establishes a priority list as to the granting of ancillary letters with respect to a foreign testator’s property in New York:

(a) The person expressly appointed in the will as executor with respect to property located within this state.

(b) The person to whom domiciliary letters have been issued or if domiciliary letters are not issued, the person appointed in the will to administer all property wherever located.

(c) The person acting in the domiciliary jurisdiction to administer and distribute the testator’s estate.

(d) A person entitled under this act to letters of administration c.t.a.

Since the Will was a Greek Will, the New York court looked to the law of Greece to determine whether the named executors in the Will had the authority under SCPA § 1604 to qualify for ancillary letters.  A hearing was held on this issue.  Under Greek law, where a Will contains a charitable bequest, only the executor may distribute the assets.  Where there are no charitable bequests, the powers of the executor are subordinate to those of the legatee(s).  Citing Greek law, experts for both the petitioners and the respondents agreed on this point.  Thus, under New York law and the priorities established under SCPA § 1604(1), the executor under the Greek Will was granted ancillary letters in preference to the legatees.  However, the court stipulated that no assets from New York could be moved to Greece without further order of the court and notice to the legatees.

In part, this result was possible because the United States has diplomatic relations with Greece.  But what happens when the legatees reside in a country where State Department regulations circumscribe what the courts may do?

In re Estate of Mitzkel, 36 Misc. 2d 671, 233 N.Y.S.2d 519, 1962 N.Y. Misc. LEXIS 2467 (Surrogate’s Court of New York, Kings County October 15, 1962 ), the decedent, a New York resident of Lithuanian descent, left his New York estate to his two sisters, both citizens and residents of Lithuania.  At the time, Lithuania had been annexed by the Soviet Union.   The Consul General of Lithuania at New York filed a petition in Surrogate’s Court on behalf of the Lithuanian nationals.  Thereafter, the sisters were transported 500 miles from Lithuania to Moscow where they executed a power of attoney before the U.S. Consul in Moscow appointing a New York law firm to represent them in Surrogate’s Court.   Based on this power of attorney, the Soviet government had  hired attorneys in New York to represent the interests of the sisters.  These attorneys then filed a notice of appearance with the court.   The Consul General of Lithuania then filed a motion seeking to have declared as invalid the sisters’ power of attorney executed to the Soviet government and the notice of appearance by their attorneys.

At issue was the validity of the power of attorney.  Several factors pointed to the illegitimacy of the Soviet power of attorney.  First, the instrument stated that the sisters lived in the U.S.S.R instead of Lithuania.  Second, the sisters were illiterate and could not have understood the contents of the power of attorney.  Third, the sisters had been forced the travel from their homes under duress by Soviet officials.  Fourth, the services of the law firm had been illegally procured by an agent of the Soviet Union, namely a lawyers’ collective called the “Iniurcolleguia” and described as being “an essential force in subjecting the common people of Russia to the dictator’s power” (Wash. U. L. Q., supra, June, 1958, p. 252), and “tools of the State” (48 Cal. L. Rev., supra, pp. 794-795).  In the instant case, the goal of the Soviet lawyers’ collective was to extract fees from the sisters to be deposited into a common treasury used to pay these Soviet lawyers.

The United States never recognized the incorporation of the Baltic States (Estonia, Latvia, and Lithuania) into the Soviet Union.  In a letter dates March 26, 1948, the State Department had cautioned each State governor not to give access to the Surrogate’s Court (or its State equivalent) to any Soviet officials or their attorneys for the settling of estates of decedents from Baltic States dying in the U.S.  The Surrogate’s Court found this sufficient to declare the Soviet power of attorney invalid as well as the notice of appearance by the New York attorneys representing  the “Iniurcolleguia.”

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Asserting Rights Obtained through Inheritance from a Foreign Decedent

In New York, individuals who wish to assert rights obtained through inheritance from a foreign decedent without first obtaining the required documentation may likely find that they do not have standing to pursue their claims in New York courts without first obtaining required letters or filing an affidavit. While this additional proof does not guarantee standing, it does allow for the presentation of a more complete record to be made upon which the court can make a determination of standing.

In 1935, Paul von Mendelssohn–Bartholdy, a descendant of the composer Felix Mendelsshon and a member of a prominent German Jewish family, was forced to sell under duress a Picasso painting “The Absinthe Drinker (Angel Ferdinand de Soto)” to the Nazis.  In 1995, Sotheby’s sold the painting to The Andrew Lloyd Webber Art Foundation at an open auction.  The Foundation then sought to sell the painting in 2006 at auction at Christie’s in New York. Julius Schoeps, a German national and a great-nephew of Bartholdy and an heir to 12.5% of the estate, filed suit against the Foundation in the United States District Court for the Southern District of New York, seeking temporary restraining orders to stop the sale of the painting and preventing the Foundation from taking the painting out of the United States (Schoeps v. Andrew Lloyd Webber Art Foundation, 66 A.D.3d 137, 884 N.Y.S.2d 396, 2009 N.Y. Slip Op. 06155)

For its part, the Foundation claimed that Schoeps lacked standing in New York to pursue his claim because he had not been appointed a personal representative of the estate pursuant to Estates, Powers and Trusts Law §§ 11–3.2(b) and 13–3.5.  Schoeps argued that, under German law, ownership rights vest immediately in the heirs, making the appointment of a personal representative of the estate unnecessary.

Section 11–3.2(b) of the Estates, Powers and Trusts Law provides, in pertinent part, that an action for injury to person or property belonging to a decedent may be maintained by a personal representative of the decedent.  EPTL 13–3.5(a)(1) provides that a personal representative of a foreign decedent who seeks to maintain a cause of action in New York must, within 10 days after commencing the action, file a copy of the letters issued to the representative, duly authenticated as prescribed by CPLR 4542. If the action is not brought by a personal representative, the individual is required to submit an affidavit setting forth the facts which authorize him to act for the decedent, along with such other proof as the court may require.

For his part, Schoeps relied on an outlier case, Roques v. Grosjean, that was nonetheless on point.  (Roques v. Grosjean, 66 N.Y.S.2d 348, [Sup. Ct., N.Y. County 1946]).  Roques remains the only New York decision holding that letters are not needed by a nonresident to maintain a cause of action in New York, when the law of the plaintiff’s domicile vests title to personal property in the heirs at the time of death. Such was the case for Schoeps.  The Roques court had based its holding in part on a Ninth Circuit decision in California, holding that the public administrator was not a necessary party to an action for fraud by the heirs of a French resident and California property owner (see Anglo California Natl. Bank of San Francisco v. Lazard, 106 F.2d 693 [1939], cert. denied 308 U.S. 624, 60 S.Ct. 379, 84 L.Ed. 521 [1939] ).  However, the Ninth Circuit added a footnote that laid out the appropriate method for an heir to a French estate to establish his/her standing, namely by filing all testamentary instruments with a Notary, and then having the Notary execute a written instrument known as an “acte de notariété” (id. at 699 n. 2). A proceeding before a French Notary was still necessary for standing.

In Schoeps, the court denied Schoeps standing to pursue his claim against the Foundation because he had not complied with the procedures set out in either Estates, Powers and Trusts Law §§ 11–3.2(b) or 13–3.5.

Schoeps and the Andrew Lloyd Webber Foundation reached an out-of-court settlement that allowed the foundation to retain ownership of the painting and to be free to sell the work.  On 23 June 2010, the painting was sold at auction for £34.7 million.

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Alexander Hamilton, Trusts and Estates Attorney, Part 3

“What are the rights of the individuals composing a society and living under the protection of the government when a revolution occurs, a dismemberment takes place, and when new governments are formed and new relations between the government and the people are established?”  This was the pressing question asked by the U.S. Supreme Court in 1830 as it considered a case arising from the Last Will and Testament of Robert Randall containing testamentary trust for the establishment of Sailor’s Snug Harbor that Alexander Hamilton had drafted.

New York has always been known as the city of immigrants.  It was so when Alexander Hamilton arrived in New York, then known as the Province of New York and a British proprietary colony. Alexander Hamilton’s role in the Revolutionary War and in the founding of the United States is now well-known.  Less well-known is the complex history of New York from the time of the Declaration of Independence until the British retaking of the city in September of 1776, and the occupation of New York by the British until the retaking of the city by George Washington’s Continental Army on November 25, 1783.  During those tumultuous times, loyalists and revolutionaries considered themselves citizens of New York.  But who was a citizen and who was an alien?  Who had the right to inherit property?

Revolution in New York had begun before the Declaration of Independence.  On May 22, 1775, a group of local revolutionary representatives calling themselves the New York Provincial Congress had declared themselves the government of New York.  But New York was also home to Loyalists, colonists born in New York who remained loyal to the British Crown.  New York was the only colony not to vote for independence on July 4, 1776 and only endorsed the Declaration of Independence five days later.  About a third of the population of New York considered themselves Loyalists.  One of them was Bishop Charles Inglis.  From 1773 until the British defeat in 1783, Charles Inglis had been the rector of Trinity Church.  He resigned his post in 1783 and, like many Loyalists, emigrated to Nova Scotia where in 1788 he founded King’s College in Windsor, Nova Scotia.  Charles Inglis never returned to New York.  He had a son, John Inglis, who was born in New York in 1776 but who emigrated to Nova Scotia with his father.  John Inglis was ordained deacon by his father in 1801 and  became Rector of St, Paul’s in Halifax, Nova Scotia in 1816.  In 1826, John Inglis became the third Bishop of Nova Scotia.  Thereafter, he began a legal challenge to reclaim his rights to Robert Randall’s estate.

In the record of the U.S. Supreme Court case of Inglis v. Trustees of Sailor’s Snug Harbor (28 U.S. 99 (1830)),  John Inglis stated an uncontroverted claim to be related to Robert Richard Randall through Margaret Inglis, his mother, who was a descendant of John Crooke, the common ancestor of Robert Richard Randall, Catherine Brewerton, and Paul R. Randall.  But was kinship sufficient to claim an inheritance under Randall’s Will?  John Inglis had been born in New York before the Declaration of Independence, and he had lived in New York prior to the British re-occupation in September 1776.  As a child, he had emigrated with his father to Nova Scotia, his mother having died while the family lived in New York.  Did his birth on New York soil alone establish his right to inherit under Robert Randall’s Will and nullify the Sailor’s Snug Harbor Trust?

In his opinion, Justice William Johnson, who had been appointed to the Court by Thomas Jefferson, held that “(A) person born in New York before 4 July, 1776, and who remained an infant with his father in the City of New York during the period it was occupied by the British troops, his father being a loyalist and having adhered to the British government and left New York with the British troops, taking his son with him, who never returned to the United States, but afterwards became a bishop of the Episcopal Church in Nova Scotia; such a person was born a British subject, and continued an alien, and is disabled from taking land by inheritance in the State of New York.” This property and inheritance holding would be used to control both immigration and property ownership throughout the 19th century in New York.  Currently, New York’s SCPA § 2218 provides a procedure for aliens to inherit money or property located in New York.

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When Is a Child an Heir under New York Law?

In days gone by, legitimate heirs were the product of a legitimate marriage.   Any child born of a legitimate wife was considered to be the heir of her husband.  Hence, a woman’s virginity prior to marriage was a necessary precondition of the propertied classes, as was her fidelity during marriage.  Adultery by the wife was a crime against property for it chanced to produce an heir who was not the issue of her spouse, thereby depriving the legitimate heirs of a portion of their birthright.    Of course, a man could sow his “seed” far and wide and, unless he recognized the child as his own, the illegitimate child would never inherit from the father.  

But family construction is much more fluid these days, and the laws of New York have sought to respond to these changes.  The legal standard remains the best interest of the child, and the laws seek to protect the child’s welfare.  Let us look at a few of the more common scenarios where establishing legal paternity means that the child will also inherit from his/her father in intestacy.

 A.  Child Born of an Unwed Mother

While our society and our laws no longer impose the stigma of illegitimacy or bastardy on an innocent child, the laws governing intestacy in New York nonetheless provide the parameters for defining who is a legitimate heir.  This is necessary to protect the rights of succession of legally-recognized descendants and to arrange for the orderly transfer of property. 

Until 1997,  no formal acknowledgment was required by the father for the mother to list his name as the child’s father.   But because paternity brings with it a host of legal and financial obligations, New York State’s Public Health Law §4135 now requires that the father fill out and sign a form formally acknowledging legal paternity of the child.   The law was passed to prevent fraud.

A putative father can also petition the court for an order of filiation to establish paternity.  The court may order DNA testing in order to establish filiation.  Putative fathers are also encouraged to register with the New York State Putative Father Registry (a non-public registry) so that they can be notified should the child, for example, be put up for adoption.

With an acknowledgment of paternity, the child is vested with certain rights, including inheritance rights, rights to support until age 21 or emancipation, Social Security survivor benefits, among others.  The father also gains support obligations and rights such as the right to refuse adoption or foster care of the child, the right to consent to medical treatment for the child, and the rights of shared custody and visitation, among others.

It is worth noting here that if the putative father is under the age of 18, he does not have the legal capacity to establish paternity in this way (or in court) without legal representation.  As a minor he cannot enter into a legally binding contract.  The contract is voidable.  However, upon reaching majority the putative father can expressly ratify the contract, and the ratification brings with it all of the rights and obligations of paternity.

B. Adopted Child

Adoption was uncommon prior to the 19th century, and today remains the province of each state to govern. In New York, adopted in children may inherit from their adoptive parents but not from their biological parents, unless the biological parent specifically names the adopted out child as a beneficiary in a duly executed Will. The law also permits step-parent adoption and second parent adoption in cases of same-sex couples. Where a child has been conceived through surrogacy, a practice not permitted in New York, then the non-biological parent(s) must petition the court for paternity in the case of the father and for adoption in the case of the second  mother. 

C. A Child Born of a Marriage but Where the Father is not the Wife’s Husband

Because a child born of a legal marriage is presumptively the husband’s child, this raises special concerns for both the husband and the biological father.  As we discuss these scenarios, it is important to remember that the best interests of the child remains the legal standard.

Should the biological father wish to be declared the legal father of the child, then either the mother or the alleged father can petition the Family Court.  The petition will state that the child was not a product of the marriage, that the mother is married but not to the alleged father, and that the mother and the alleged father had sexual relations during which time the child was allegedly conceived.  The alleged father may also provide an affidavit stating these same facts and admitting paternity. 

If the non-biological father does not wish to block the challenge to paternity, then he may provide an affidavit of “no access”  in which he will swear that he had no sexual relations with his wife during the time period when the child could have been conceived.   The legal presumption for the time of conception is between 266 and 299 days from the beginning of the mother’s last menstrual period.

It is worth noting that New York public policy limits third party challenges to paternity of a child born in wedlock.  Thus  the husband has the right to block this petition if he wishes to raise the child as his own.  The court has the right to deny DNA testing if in the court’s opinion this would not be in the best interest of the child, especially if the child is no longer an infant and has been part of the family unit for some time. 

The legal principle of equitable estoppel may also prevent a husband or wife from challenging paternity several years after the birth.  Thus is particularly true where the non-biological father has established himself in the role of the father, where both husband and wife have held out the non-biological father as the father of the child, and where the child has relied upon these representations of paternity 

Conclusion

Because of the importance of establishing and clarifying filiation, it is important that parents take the necessary steps to ensure that their child is properly filiated so that his/her inheritance rights are secure.

If you would like to discuss your own personal situation with me, or how a revocable living trust for your digital assets can be tailored to your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly.

Defining Parentage in the Age of Surrogacy, Part 1: Who is a Parent?

On the surface, the question of who is a parent may seem simplistic or even obvious. But from a legal perspective, the issue of parentage has become a challenging one in the age of assisted reproductive technologies (ART) that include in vitro fertilization, surrogacy, genetic vs. gestational motherhood, etc. In this series, I will explore the question of parentage by looking at both the New York State statutes that govern parentage as well as some recent cases that are defining the legal framework for this issue.

At common law, the issue of parentage was simple. The mother was she who bore and delivered the child. Parentage was defined by birth to a mother and her marriage to the child’s father. Any legal  impediment to marriage failed to confer this presumptive paternity.  Once the child was born, the child’s property rights flowed through the husband of the child’s mother. At law, the husband was considered the presumptive father of his wife’s children. This remains the state of the law today (Michael H. v Gerald D., 491 US 110 (1989)), and is codified in New York in Family Court Act (FCA).

At common law, any legal questions regarding parentage or lineage involved issues of paternity exclusively.  This remains largely the case today, and the statutory scheme in the New York Code reflects this gendered language and thinking about parentage.  And while the rights of a mother to her child may be presumptive in this statutory scheme, they become at issue in cases where advanced reproductive technologies are used in procreation.  As we shall discover in this series, defining parentage is becoming a complicated matter.

Because legal rights historically have been conferred on children through their fathers, mothers of children born out of wedlock traditionally have sought legal protection for their children through paternity proceedings.  This is still the case in New York today as codified in FCA § 513. The Family Court has the exclusive original jurisdiction for all paternity proceedings in New York.

Of the many benefits that flow to children from having two recognized legal parents, one very tangible right is that of collecting social security benefits from both parents.  For the purposes of eligibility, the Social Security Act defines “child” according to the inheritance laws of each state (42 USC § 416 [h] [2]) .  Inheritance laws differ in each state, and in  New York are governed by the Estates, Powers & Trusts Law (EPTL).  Please refer to my prior post on this issue.

Because it is in the best interest of the child that the child have the benefit of two parents, New York law provides for a simplified way for an unwed father to acknowledge paternity.  Paternity may be acknowledged prior to the birth of the child through a procedure established in Public Health Law § 4135-B (1)(a):  “Immediately preceding or following the in-hospital birth of a child to an unmarried woman, the person in charge of such hospital or his or her designated representative shall provide to the child’s mother and putative father, if such father is readily identifiable and available, the documents and written instructions necessary for such mother and putative father to complete an acknowledgment of paternity witnessed by two persons not related to the signatory. Such acknowledgment, if signed by both parties, at any time following the birth of a child, shall be filed with the registrar at the same time at which the certificate of live birth is filed, if possible, or anytime thereafter.”

Paternity may also be established after birth “by a written statement, witnessed by two people not related to the signator or as provided for in section four thousand one hundred thirty-five-b of the public health law. Prior to the execution of such acknowledgment by the child’s mother and the respondent, they shall be advised, orally, which may be through the use of audio or video equipment, and in writing, of the consequences of making such an acknowledgment. Upon the signing of an acknowledgment of paternity pursuant to this section, the social services official or his or her representative shall file the original acknowledgment with the registrar (Social Services Law § 111-k (a)).”  Among the consequences of acknowledging paternity is that the birth mother may file for child support from the father in Family Court.

After the acknowledgment is filed with the registrar, a new birth certificate will be issued that reflects the names of the birth mother and the “putative” father (Public Health Law § 4138 (1)(e)).  The father remains “putative” even after acknowledgment of the child because the presumption of paternity is conferred only upon a man married to the birth mother.

Parentage of a child can also be conferred through adoption.  Adoption is a creature of statutory law because it runs counter to the common law principles of parentage. Through adoption, courts create new legal relationships between the parent(s) and the child.  Please refer to my prior series on Adoption and Inheritance in New York for more detailed information.

In the next installment of this series, I will examine how reproductive technologies are challenging our established notions of who is the child’s mother.  I invite you to join my list of subscribers to this blog by clicking on “Sign me up!” under Email Subscription on the left-hand side of the page so that you can receive a notification when the next installment has been published.   Thank you.

If you would like to discuss your own personal situation with me, you can get a free 30-minute consultation simply by filling out this contact form.   I will get back to you promptly.

Adoption and Inheritance, Part 4: The Million-Dollar Issue

It is not a rare occurrence for a step-parent to adopt  the child of his or her spouse.   The adoption is usually the result of a desire to create a strong family unit where a second marriage has occurred.  In the case of the adoption of Lloyd Dudley Seaman, however, his adoption by his step-father would lead to a ground-breaking New York Court of Appeals case that would define inheritance rights by the issue (children) of children adopted by their step-parent.

Lloyd Dudley Seaman’s father, Lloyd I. Seaman, married twice.  With his first wife Gladys, he had a son Lloyd Dudley.  After he and Gladys divorced, he married Mary with whom he had a daughter Roberta.  Gladys also remarried, and subsequently her new husband adopted Lloyd Dudley.  Lloyd Dudley later had a daughter Charlotte, while Roberta had no children.  Lloyd Dudley predeceased his half-sister Roberta.  In New York, half-blood relatives are considered whole blood relatives for the purposes of succession (EPTL § 4-1.1(7)(b):  For all purposes of this section, decedent’s relatives of the half blood shall be treated as if they were relatives of the whole blood.).

When Roberta passed away leaving behind an estate valued at close to $1 million,  the Surrogate’s Court had to determine whether Charlotte could inherit from her aunt since her father had been adopted by his step-father.  In New York, the child (issue) only possesses those inheritance rights that her adopted out parent possessed.  Adoption in New York is a creature of statute under the Domestic Relations Law (DRL).  The Surrogate reasoned that Charlotte could not inherit from Roberta because neither the 1986 Law Revision Commission recommendations nor the State Legislature that enacted those recommendations into law provided for the descendants or issue of adopted out children.  Charlotte appealed the decision to the Appellate Division Second Department, which agreed with the decision below.  Charlotte then appealed to New York’s highest court, the Court of Appeals.

In Matter of Seaman, 576 N.Y.S.2d 838 (1991), the Court of Appeals would extend the rights of children whose parent had been adopted by a step-parent.  Since the inheritance rights of the issue of adopted out children are dependent upon their parent’s inheritance rights, the court had to do a textual and historical analysis of the statutory language to reach its decision.  As a result, this case presents us with some rich background in New York adoption history.  It is also instructive because the court relied as much on what was left unsaid by the Legislature, extracting from the silence an implicit reference to prior rights

Beginning in 1887, New York amended its adoption law with respect to inheritance rights, granting adopted children and their heirs inheritance rights from their adoptive parents while not severing their rights to inherit from their natural parents (for a very good historical analysis, see Anne Wiseman French’s article When Blood Isn’t Thicker Than Water: The Inheritance Rights of Adopted-out Children in New York, 53 Brooklyn L Rev 1007, 1011-1012 [1988]).  This was not a legislative oversight because in 1896 the Legislature affirmed its initial position when it once more amended the statute to read that the “rights of inheritance and succession from his natural parents remain unaffected by such adoption” (L 1896, ch 272, § 64).  

This version of the law remained in effect until 1963 when the Legislature terminated the inheritance rights of the adopted out child with respect to its biological parents.  It did, however, permit an exception for step-parent adoption where the custodial natural parent consented to the adoption.  In 1986, as a result of a Court of Appeals decision in In re Best, 66 N.Y.2d 151 (1985), the law was amended to state that the adopted-out child was deemed a “stranger” with respect to the biological parents.  A year later, the Legislature restored the adopted child’s limited rights in intestacy, now codified as DRL § 117(1)(e).

The issue before the Court of Appeals in Matter of Seaman was one of statutory construction because the statutes control the inheritance rights of adopted out children. Was it deliberate on the part of the Legislature to omit mention of the inheritance rights of the descendants of adopted out children in the 1987 amendment, or was it merely an oversight? If a mere oversight, then what were the rights of succession for these descendants?

The court relied heavily on the statutory language of  DRL § 117(1)(e)(1) in its decision: “the decedent is the adoptive child’s birth grandparent or is a descendant of such grandparent.”  The court found that it had direct applicability with respect to Lloyd Dudley and Roberta since they shared a common grandparent.  The court then reasoned that in the 1987 amendment the Legislature had impliedly granted the inheritance rights to the issue of the adopted out child to the same degree that these had been restored to the adopted out child.   Since the Legislature had in the past been explicit in its directive regarding the inheritance rights of descendants, the court reasoned that the Legislature’s silence on this point in the latest amendment was to be understood as a tacit affirmation of its prior stance, namely that inheritance rights of descendants of adopted children are contingent upon their parent’s rights to inherit from their natural family.

Furthermore, the court distinguished between two types of adoptions, one where the child is adopted out to strangers and the other where the child is adopted by the biological parent’s second spouse.  In the first instance, several policy concerns motivate the severance of ties between the adopted out child and the biological family, including the need for confidentiality in order to permit the full assimilation of the child into the adoptive family.  Such policy concerns are of no import in the second type of adoption, a kind of intra-family adoption that results from the divorce of one parent.  The step-parent is adopting with the permission of the biological parent, and the natural parent is not relinquishing any rights to the child.  The adoption is undertaken because of a desire to blend fully the new family.

The Court of Appeals thus found in Charlotte’s favor, permitting her to inherit from her father’s step-sister Roberta Seaman.  In so doing, the court acknowledged the reality of blended families that come into existence following a divorce and supported such intra-family adoptions by granting inheritance rights to the descendants of these children.

Matter of Seaman also serves to illustrate an important point about the need to review your Will and estate plan on a yearly basis with your attorney.  Things in your life will surely change from year to year, and it is a good practice to get in the habit of talking through those changes with your attorney.  Your attorney will be able to advise you as to any impact on your estate plan.

If you would like to discuss your own personal situation with me, you can get a free 30-minute consultation simply by filling out this contact form.   I will get back to you promptly.

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Adoption and Inheritance, Part 3: When the Adopted Out Beneficiary Dies Before the Birth Parent

In 1924, Mildred Murphy gave birth to a son whom she named Arthur. Arthur went to live with the Manning family who renamed him Clair Willard Manning. The Mannings officially adopted Clair in 1944 when he was 19. Sometime after World War II, Mildred and Clair re-established contact. Mildred had no other children.

Clair would eventually have four children of his own.

In 1998, Mildred executed a Will with this relevant provision:

“Fifth. I give, devise and bequeath to Clair W. Manning of Wellsboro, PA the real property owned by me on Keuka Lake, located at 132 and 134 West Lake Road, consisting of a cottage, extra lot and boathouse together with all of the contents and property located therein and thereon. I further give and bequeath to Clair W. Manning the sum of Eight thousand dollars ($8,000.00).”

She also bequeathed half of her residuary estate to Clair, the remaining half to go to her sister-in-law, Evelyn Beckman. Mildred passed away on Valentine’s Day 2002, having been predeceased by Clair on 4 March 2001.

In my previous post, I considered the issue of class gifts and the requirement under New York law that an adopted out child be specifically named in a Will or a trust in order to inherit from a birth parent as illustrated by the Matter of Piel case. For the purpose of inheritance, Domestic Relations Law (DRL) § 117 terminates the adopted-out child’s right to inherit from the biological parents unless the adopted out child is specifically named, but at the same time gives the adopted child the right to inherit from the adoptive parents.

Today’s fascinating case, Matter of Murphy, presents another twist on that same theme. In Murphy, the New York Court of Appeals case focused on the rights of the children of an adopted out child who had been named in his birth mother’s Will but who had predeceased her. In this case, the court had to construe two very relevant statutes that implicated each other but did not reference each other. In Murphy, the Court of Appeals bridged these two statutes and at the same time extended the rights of the issue of adopted out children who are named beneficiaries in a Will.

As Judge Rosenblatt noted in his majority opinion, at issue was the definition of “issue.” Can the children of a named adopted out child inherit the adopted out child’s gift, or does the gift lapse and fall into the residuary estate? More to the point, what is the interplay of New York’s anti-lapse statute (EPTL 3-3.3) with the statute governing the inheritance rights of adopted children (DRL § 117(2)(b)), particularly with respect to descendants of a named adopted out child in a Will (see my prior posting on Matter of Piel)?

What is the anti-lapse statute? The anti-lapse statute takes effect when the beneficiary under a Will dies before the testator because the law does not permit a gift to be made to a deceased person. The anti-lapse statute “saves” the gift and passes the gift on to the issue of the deceased beneficiary. However, the law applies the statute to a very narrow band of persons. The anti-lapse statute applies only when the deceased beneficiary was the issue, brother, or sister of the testator, and when the deceased beneficiary has issue (children) who survive the testator.

There are three additional important provisions concerning the anti-lapse statute. First, the anti-lapse statute will only go into effect as a result of a Will. If a person dies without a Will, the law of intestacy will apply (see my prior post on the difference between a beneficiary and an heir), meaning that the adopted out child cannot be an heir of their birth parent. Secondly, the anti-lapse statute trumps the deceased beneficiary’s Will with respect to the inherited gift because the law names the substitute taker. Finally, if a gift in a Will is conditioned upon the survival of the beneficiary, it will automatically rule out the application of the anti-lapse statute.

Note that the anti-lapse statute makes no direct reference to the inheritance rights of adopted out children. The adoption law (DRL § 117(2)(b)) is also silent with respect to the anti-lapse statute. New York law provides for full inheritance rights of adopted children from their adopting family (and vice versa), but inheritance rights of adopted out children are severed from their natural parent or kin unless (1) they are expressly named in a Will or trust; (2) they are adopted by the spouse of a natural parent, in which case the child and his issue can inherit from the adopting parent and either natural parent; or (3) the child is adopted by a relative, in which case the child can inherit under the adoptive relationship.

Furthermore, under the terms of the anti-lapse statute, if the child is adopted out by a brother or a sister of the testator (the birth parent), then the adopted out child qualifies as a substitute taker under the anti-lapse statute. If the child is related by both adoption and a natural relationship, then the adopted out child inherits under the natural relationship. This would be the case when the child was adopted by an aunt, for example, and the aunt’s mother (the child’s natural grandmother) dies. The adopted out child would inherit as a natural descendant of the grandmother. If the adoptive aunt predeceased the adopted out child, then the adopted out child could take under the anti-lapse statute.

Under New York law, adopted out children are considered “strangers” with respect to their birth mothers for the purpose of inheritance, even if they re-establish a relationship. The adopted out child inherits from the adoptive parents and, as a result, so do their children (issue). The adopted out child may inherit specific bequests or class gifts from the birth parents only if specifically named in the Will. The law is silent as to the operation of the anti-lapse statute in such a case.

Does the act of naming of an adopted out child in a Will change that person’s status from “stranger” to “issue”? This is what the court in Murphy was asked to decide. If the answer was yes, then the anti-lapse statute would be in effect and Clair’s children would inherit his bequest. If the answer was no, then Clair’s gift would fall into the residuary estate and Evelyn Beckman would inherit all of the residuary estate.

The court found in favor of the Manning children. “We therefore conclude that when Mildred Murphy named her adopted-out son Clair as a beneficiary of her will, she triggered the condition in section 117 (2) that made him a nonstranger, and thus her issue, with respect to the relevant bequest. His children, therefore, are entitled to the benefit of the anti-lapse statute.”

What Murphy means in practice is that a child adopted out by strangers receives the same rights as a child adopted out by a close relative (brother or sister of the testator), merely by being named in the testator’s Will. Murphy extends the inheritance rights of the named adopted out child’s issue under the anti-lapse statute and puts them on equal legal footing with a child adopted out by a sister or brother of the testator. And because the anti-lapse statute overrides the deceased beneficiary’s Will by operation of law, it may have the unintended consequence of defeating the original testator’s estate plans or the estate plans of the predeceased beneficiary.

The Murphy case points out once again the necessity of working with an attorney to draft your Will and tailor it to your individual needs. Though it may seem contrary to nature, children at times do predecease their parents, and this reality must somehow be accounted for in your Will. Your attorney will work through some scenarios with you to make sure that all of your wishes are met and executable. No boilerplate form can do this kind of reasoned and careful drafting befitting your individual needs.

If you would like to discuss your own personal situation with me, you can get a free 30-minute consultation simply by filling out this contact form.   I will get back to you promptly.

In the next segment of this series, I will look at yet another fascinating New York case involving adopted-out children and inheritance rights. I invite you to join my list of subscribers to this blog by clicking on “Sign me up!” under Email Subscription on the left-hand side of the page so that you can receive a notification when the next installment has been published. Thank you.

Adoption and Inheritance in New York, Part 2: Just (Jell-O) Desserts under the Best Rule

In 1974, 19-year old Oregon native Elizabeth McNabb set out to find her biological parents armed with one clue offered by a family gynecologist.  Elizabeth’s adoptive parents had revealed her adoption to her when she was nine years old.  They also gave her an important clue:  they told her that a family gynecologist had handled her birth.  At age 15, Elizabeth had asked the gynecologist about her birth mother.  The gynecologist demurred and offered scant information about Elizabeth’s birth mother, other than that her mother had been a “bohemian.”.  But after McNabb became a mother herself, she redoubled her efforts to find out about her mother.  Nothing could have prepared her for her ultimate discovery, that her mother was an heiress to the multi-million Jell-O fortune, or for a legal journey that would end in New York’s highest court.

Prior to 1998 and the passage of Measure 58, Oregon’s adoption records were sealed.  This was the standard policy governing most state laws regarding adoption records, including New York.  In 1935, New York’s Governor Lehman signed the closed record law that remains the law in New York today.  Confidentiality was advocated to minimize the stigma of illegitimacy, to prevent unwanted contact between children and their birth mothers, and to make it possible for some adoptive parents to never reveal to the child that they had been adopted. 

New York courts, as well as courts in other states, effect confidentiality by producing new birth certificates listing the names of the adoptive parents’ names as the parents at the time of the issuance of the adoption decree. The original birth records containing the names of at least the birth mother are then sealed away.

Sealed adoption records remain the law in New York. The court in Matter of Linda F. M., 52 NY2d 236, 239 (1981), explained that the sealed records law “shields the child from possibly disturbing facts surrounding his or her birth and parentage,” a clear reference to the stigma of illegitimacy; “permits the adoptive parents to develop a close relationship with the child free from interference or distraction,” thereby giving the adoptive parent(s) the exclusive right as to whether to reveal the conditions of the child’s birth; and “provides the natural parents with an anonymity that they may consider vital,” protecting the identity of the birth mother.

Because her records were still sealed in Oregon in 1988, Elizabeth McNabb petitioned the judge who had issued her adoption decree to open her sealed record.  She pleaded a medical exception that existed in the then-Oregon law, saying that she needed to know her medical history because she was now a mother herself.  She argued on behalf of the welfare of her children.  The judge was persuaded by the argument and ordered that McNabb’s original birth certificate be sent to her.   That is when she discovered that her birth mother was a certain Barbara Woodward of Rochester, N.Y.

New York also has a medical exception for the unsealing of original birth certificates of adopted out children.  The provision is contained in DRL § 114(4).   As a first step, the adopted out child, the petitioner,  must obtain the certification of a doctor licensed to practice in New York stating with specificity why this medical information is required:  “Certification from a physician licensed to practice medicine in the state of New York that relief under this subdivision is required to address a serious physical or mental illness shall be prima facie evidence of good cause. Such certification shall identify the information required to address such illness.”  Only in the case of an immediate medical emergency may the court grant, at its discretion, direct access to the adoption records by the petitioner.

In all other cases the court will appoint a guardian ad litem or another disinterested person to examine the original adoption records for the purpose of satisfying the petitioner’s medical request.  The birth person will be given the opportunity to disclose the requested medical information, or to grant the request to examine the birth parent’s medical records.  The guardian ad litem will then report the findings to the court.   In some cases, “the court may in its discretion authorize direct disclosure or access to and inspection of the adoption records by the petitioner” where appropriate.

Having learned her birth mother’s name and hometown, McNabb became calling Woodwards in Rochester, New York.  Her diligence paid off:  she found a Barbara Woodward who had married and moved to Maine.  McNabb then called Woodward, who confirmed that she was indeed her birth mother.  They decided to meet.  McNabb, then living in Washington State, flew cross country and spent four days at Woodward’s farm in Genesee County in upstate New York.

During her visit, McNabb learned that she was the result of her mother’s relationship with a married man, and that Woodward had given birth in Oregon in order to cover up the stigma of illegitimacy.  Woodward had subsequently married and was the mother of two other daughters,  Stobie Woodward Piel and Lila Piel-Ollmann.  McNabb also learned that Woodward was an heiress to the Jell-O fortune. 

According to a Huffington Post story, Woodward’s grandfather Orator Woodward had purchased the Jell-O trademark in 1899 for $450 from  Pearle Bixby Wait, a carpenter in Le Roy, New York.  Wait had created the dessert by mixing fruit and gelatin in 1897, but the door-to-door sales business never took off.  By the time of Wait’s death in 1915, Woodward had turned the dessert into a multi-million dollar industry. Orator and his wife Cora had six children.  Their son Donald’s first marriage was to Florence Stobie, Barbara’s mother.

Barbara Woodward Piel died in 2003.  The Woodward family fortune was controlled by two trusts established in 1926 and 1963.  At issue was whether New York law permitted an adopted out child to receive a bequest from these trusts.

The Surrogate’s Court in Monroe County ruled that McNabb was not a descendant under the terms of the trust, and thus was not entitled to a third of her mother’s estate valued at more than $10 million.  The court relied on a ruling in Matter of Best, 66 NY2d 151 (1985).  The court in Matter of Best held that a class gift, a testamentary gift giving a sum to an unspecified number of persons who will be determined at the time of the donor’s death, did not presumptively include adopted-out children.   In order to receive a gift under the Best rule, an adopted-out child would need to be specifically named in the Will or trust.

McNabb appealed the ruling, and the Appellate Division Fourth Department reversed the lower court’s ruling, in part because the trusts had been executed prior to New York’s 1963 and 1966 amendments to its adoption law (see my prior post on the history of adoption in New York for more details).

New York’s highest court, the Court of Appeals, reversed the Appellate Division and reinstated the Surrogate’s rulings.  In Matter of Piel, 2008 NY Slip Op 02082 (10 NY3d 163), decided on 13 March 2008, the court once again relied on Best and added several policy considerations.  Among these were the difficulty of a trustee closing out a class for the purpose of estate administration for fear that a secret, adopted out child might be lurking out there, and the State’s interest in the finality of court decrees and titles to property.  Elizabeth McNabb did not receive a part of her mother’s bequest under the terms of the two trusts.

Could the result have been different?  Yes.  Had Barbara specifically named her adopted-out child in her estate planning documents, Elizabeth would have received her share of her birth mother’s estate.  Clearly Barbara Woodward Piel welcomed the reunion with her adopted-out daughter, and Elizabeth had established relationships with her half-sisters — the warm relationships would not survive the legal wrangling.  But Barbara had not changed her Will to identify Elizabeth by name as her adopted-out child.  The Piel case provides a cautionary tale for reviewing your estate plans with your attorney on a yearly basis to account for the changes in your life.  Your attorney will then be able to offer suggestions based upon the current state of the law in New York.   No boilerplate forms can provide this level of protection for your family and your wishes.

If you would like to discuss your own personal situation with me, you can get a free 30-minute consultation simply by filling out this contact form.   I will get back to you promptly.

In the next segment of this series, I will look at yet another fascinating New York case involving adopted-out children and inheritance rights.  I invite you to join my list of subscribers to this blog by clicking on “Sign me up!”  under Email Subscription on the left-hand side of the page so that you can receive a notification when the next installment has been published.  Thank you.

What is the Difference between an Heir and a Beneficiary?

In everyday life, you will often hear people speak about their hope for an inheritance from a family member or relative.  However, this commonplace use of the term “inheritance” often masks a misunderstanding of the law and can lead to unintended consequences when misplaced assumptions are not addressed.  Today we are going to examine exactly what the term “inheritance” means from a legal standpoint, and how having a Will takes uncertainty out of the equation.

What defines an “heir”?  Strictly speaking, one is not an “heir” of a living person.  That is because the exact identity of an “heir” is determined at the time of the decedent’s death.  The determination is made by the laws of the jurisdiction, and not by the decedent.  An “heir,” then, is a legal creation and its terms are defined by a State.  One becomes an heir by virtue of satisfying the definition in a statute.  In New York, that statute is EPTL § 4-1.1. That is because New York  has an interest in the smooth transfer of property from one generation to the next.  As such, an “heir” is the statutory recipient of property from a decedent who dies without a Will (intestate).  The State is also the final “heir” in most statutory schemes.  If there are no statutory heir, then the property will go to the State (escheat).  In New York, a person who inherits property under intestate succession is called a distributee.

New York also has a “laughing heir” statute (EPTL §4-1.1(6)).  A “laughing heir” is someone entitled to inherit by law who is so remotely connected to the deceased that he or she would not feel any sorrow at hearing of the death.  To prevent this occurrence, New York cuts off heirs at the grandchildren of the deceased:  “For the purposes of this subparagraph, issue of grandparents shall not include issue more remote than grandchildren of such grandparents.”  No one more remote, such as a great-grandchild, may inherit.  After that, the property of the deceased escheats to the State.

When a person dies without a Will, New York uses as its default an intestate distribution system called per capita (“each head”) at each generation.  In this system, each person is weighed equally.  By virtue of their presence on the family tree, no one can be disinherited.  The first thing we have to do is determine the number of surviving distributees. To illustrate: Beth is a single person who dies without a Will.  She had two sons named Luke and Dick, and a daughter named Nancy.  Luke had two children, Bill and Jane, and Nancy had one child named Jim, and Dick had two children named Sandy and Sam.

At the time of Beth’s death, Luke had already predeceased her.  Had Luke been alive, he, Nancy and Dick would have each received 1/3 of the estate.  Because Luke has already died, Nancy and Dick each receive their 1/3 share, and Luke’s children divided what would have been their father’s share equally between them.  So Nancy receives 1/3, Dick receives 1/3 , and Bill and Jane each receive 1/6.   

Depending upon your family situation, the New York default system of distribution may not suit your needs.  In that case, you may want to draft a Will stipulating that you want your estate distributed per stirpes (“by each branch”) to give you more control over the outcome.  In New York, a person who receives under a Will is called a beneficiary.  Let’s say that you want your great-grandchild to receive something from your estate.  Drafting a Will eliminates the “laughing heir” statute and allows you to leave something to your great-grandchildren.  A Will also allows you to distribute your estate to a class of beneficiaries, such as “to all my children” or “to all of my grandchildren” to cover any issue born or adopted after the execution the Will (pretermitted child).  The class closes at the time of the death of the testator.

Finally, instead of having your estate possibly escheat to the State, you can name a person unrelated to you or a charity as a beneficiary of your residuary estate.  Your property can then be used in a way that is consistent with your life and beliefs.  You should seek the advice on an attorney in drafting a Will so that your wishes are reflected in the resulting document.

If you would like to discuss your own personal situation with me, you can get a free 30-minute consultation simply by filling out this contact form.   I will get back to you promptly.

I invite you to join my list of subscribers to this blog by clicking on “Sign me up!”  under Email Subscription on the left-hand side of the page so that you can receive a notification when the next installment has been published.  Thank you.